How to increase a client’s capability through outsourcing remains a problem. This papers draws on strategic management literature and the relational view to develop a theoretical model that explains the relationships between collaboration, agility, and outsourcing performance in software-as-a-service (SaaS) context. Collaboration are characterized as knowledge sharing and process alignment between a supplier and its client, agility as a supplier’s sensing agility and responding agility. This study also investigates the moderating effect of environmental turbulence on the relationships between agility and performance. The proposed hypotheses are largely supported by the empirical data from 215 firms. The results show that SaaS performance is affected by both sensing agility and responding ability, which, in turn, are impacted by collaboration between a supplier and its client. Finally, we discuss the implications of our results.